Accounting

Glossary – Accounting

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There are 16 names in this directory beginning with the letter F.
Factoring accounts receivable
The sale of the accounts receivable (usually for a fee) to a third party known as a factor.

FAS
Free Alongside Ship. Terms indicating that the seller’s price includes delivery of goods at a ship’s pier. Title to the goods will transfer to the buyer alongside the ship.

FASB
Financial Accounting Standards Board.

Favorable variance
A difference between an actual cost and a budgeted or standard cost, and the actual cost is the lesser amount. In the case of revenues, a favorable variance occurs when the actual revenues are greater than the budgeted or standard revenues.

FICA
Federal Insurance Contribution Act (FICA).

FIFO
First in, first out (FIFO).

Financial leverage
Using debt (such as loans and bonds) to acquire more assets than would be possible by using only owners’ funds. Also referred to as trading on equity.

First in, still here (FISH)
A parody of FIFO used to describe a very slow-moving item in inventory.

Fixed assets
A term used when referring to property, plant, and equipment. Fixed assets other than land are depreciated.

Float
The time between when a check is written and when the check clears the bank account on which it is drawn.

Floor
A term used in the lower of cost or market (LCM) that serves as a constraint for the market value. In the LCM for inventory, the floor is the net realizable value (NRV) minus the normal profit. This means that if the replacement cost of an inventory item is less than this amount, this amount becomes the market amount that will be compared with the item’s cost for valuing inventory under LCM.

FOB
Free on Board.

Foot
A word that means to add a column of numbers as in “Foot the amounts listed in column A”.

Freight-in
The shipping cost to be paid by the buyer of merchandise purchased when the terms are FOB shipping point. Freight-in is considered to be part of the cost of the merchandise and should be included in inventory if the merchandise has not been sold.

Fringe benefits
Compensation for employees that is in addition to salaries and wages. Examples include paid absences (vacation, sick, holiday), insurances (health, dental, vision, life), pensions, profit sharing contributions, employer matching of Social Security and Medicare taxes, unemployment taxes, worker compensation insurance, continuing education costs, etc. Generally, the cost of fringe benefits should be expensed when they are earned by the employee, not in the period in which they are paid.

FUTA
Federal Unemployment Tax Act.